Posted by Mumbai: In 2018, the IT industry witnessed some of the biggest software deals in the history. However, surprisingly, many of these software deals were actually in and around the Open source software (OSS) space, suggesting a significant rise and demand of Open source not just as a concept or a cost-saving option but the huge value it holds today and in the future.
Early this year, IT giant IBM acquired Open source software major Red Hat for $34 billion, Microsoft bought code distribution and management platform GitHub for $7.5 billion and Salesforce purchased application integration platform Mulesoft for $6.5 billion.
Adobe paid $1.68 billion for an open-source e-commerce platform Magento, AT&T picked an open source security management provider Alien Vault for an undisclosed sum and private investment group EQT bought Open source software vendor SUSE from Micro Focus for $2.5 billion – are among the major software deals of this year.
The IBM-Red Hat and Microsoft-GitHub deals
Between the IBM-Red Hat and Microsoft-GitHub deals, industry experts believe the IBM deal is more strategic given the deal size as well as the impact it will have on the overall software sector, particularly the Open source and the Cloud technology, which is moving in the direction of becoming the centre of gravity for most enterprises and organisations across verticals.
“It’s a very important development that has happened. It’s a recognition or acceptance of Open source in the enterprise software world,” says Bangalore based Benoy CS, Frost & Sullivan’s Director & Business Unit Head – Digital Transformation Practice, MENASA Region.
“The importance of Open source in product innovation is well accepted and particularly in the cloud infrastructure perspective, many of the applications and tools like Containers and Kubernetes are getting developed in Open source and are being adopted and consumed very aggressive in the industry by enterprises,” adds Benoy.
Most cloud infrastructure companies, according to Benoy always try to project to enterprises that they are not blocking any particular technology and are giving big freedom to customers.
“In that context Open source has gained a lot of traction, particularly in the cloud world. It’s a great recognition of Open source by the world and also its an extension of what customers want and their needs,” he explains.
This has clearly being reflected in IBM’s Red Hat acquisition. Having said that, the Red Hat buyout is expected to have a major impact on the overall Open source software ecosystem and its future.
Right from the sizable chunk of businesses and customers that run on Red Hat Linux platform to the fast growing Open source community globally that includes Open source based software makers and developers, users and tech startups.
“IBM’s Red Hat along with Microsoft’s acquisition of GitHub shows that Open source is beginning to make deep inroads into the enterprise other than just infrastructure,” says Mumbai based Frappe Technologies‘ Founder & CEO Rushabh Mehta.
“Not only is Open source better, the best talent would prefer working in an Open source environment as it gives them a better understanding and flexibility,” he further says.
“Over the years, we will see Open source entering more business domains like ERP and CRM,” adds Mehta, whose company offers cloud based – ERP software under the brand ERPNext – a 100 percent Indian Open-source software product.
Most of software development and innovation today is driven through Open source in varied proportions and this shift is turning into a major movement where Open source codes and standards, along with Open APIs have become the new norms in software development.
“Open source is definitely shaping a lot of the industry. If you look at the cloud, for example – Amazon Web Services (AWS) is basically selling Open source as a hosting service,” comments Mehta.
Even Binoy points out that compared to AWS, IBM is a laggard when it comes cloud infrastructure. “So with Red Hat acquisition, IBM is trying to accelerate the IBM Cloud and making itself more acceptable to enterprise customers and valuing their choice and freedom,” he says.
The changing Microsoft
In fact, it is also one of the reasons, which forced Microsoft to change its stance on Open source during the last decade or so and eventually led to the GitHub acquisition early this year. Under the CEO Satya Nadella, Microsoft appears to soften its anti Open source stance in recent years, but it is more subtle and indirect way.
Microsoft Azure cloud platform is powered by many Open source technologies and it has also joined the Linux promoting and advocating community Open Innovation Network. The move appears to suggest how Microsoft is willing to embrace the Open source software community and work with them.
In 2016, Microsoft announced the availability of its automation and scripting platform PowerShell to Open source software Linux including Ubuntu, Centos, Red Hat and Mac OS X platforms.
Historically, the Redmond based Windows operating software (OS) maker under the founder Bill Gates during the 90s and early 2000s had strongly rejected the Open source idea and remained vocal on proprietary software in a big way to drive company’s business revenue and monopoly in the market.
Along with the proprietary software came the costly ‘licensing fees’ and ‘lock-ins’ for the enterprise customers. This is where, Open source software found its early footings and gradually became a revolutionary movement world over.
Recognition of Open source software industry
Hence forth, these software deals this year are no less than a long awaited recognition and acceptance of Open source technology and its community.
“The announcement of IBM’s intention to acquire Red Hat is a clear indication of the important role Open source technology and standards will play in the current and future direction of IT infrastructure,” says Dr. Thomas Di Giacomo, CTO – SUSE.
“As SUSE moves forward as an independent business, we will be well positioned to work very closely with our partners and customers to ensure they can fully benefit from the freedom and flexibility that enterprise open source solutions have to offer them,” adds Dr. Giacomo.
Perhaps, Mehta still remains unconvinced on the recognition aspect with his reasoning. “There is still this question of how much of this value goes back to the community. If companies only use Open source and not contribute, then they will kill the goose that lays the golden eggs. These are still early days. Will both the acquisitions work? We don’t know,” he asks.
“While, Open source is great for building software, there is no real guarantee how this can be monetised. I don’t think the answer of whether the Open source can make money has been found. A lot of projects globally are struggling for contributors,” further Mehta says.
Despite of this skepticism, the fact remains through those deals a huge money has been invested into Open source software and technologies. For other Open source software vendors and players, those deals are quiet encouraging going into 2019 and years ahead.
“Yes, although Red Hat was more visible Open source company, there are other players active in the Open source space in the software industry. So it’s a great boost for those companies and also a major recognition for the Open source industry,” agrees Binoy.
“I would say the trend has just started and probably will more such deals in the future with more innovation coming from Open source software industry,” he observes.
“Open source software will grow for sure, but as far as commercial Open source companies go, they mostly will get acquired and very few will ultimately remain. Maybe it’s best for Open source projects to reside in large companies,” concludes Mehta.
(Image source : SiliconANGLE)